$2 Billion Refund Order Hits Exxon

A special federal court ruled Monday that Exxon Corp. must pay nearly $2 billion in refunds and interest on overcharges for crude oil from a Texas field.

The Temporary Emergency Court of Appeals reaffirmed a lower court`s judgment that the company had ``unjustly reaped huge profits`` by interpreting numerous provisions of the Emergency Petroleum Allocation Act ``to Exxon`s advantage.``

A three-judge panel of the special court, empaneled to resolve disputes over federal price controls that existed during the 1970s, unanimously upheld a federal court decision that Exxon improperly classified ``old`` oil from its Hawkins Field as ``new`` oil in the late 1970s. Since new oil was free from price controls, Exxon customers were overcharged $895.5 million, the court found.

Exxon stock slid $1.25, to $52.67 a share, in heavy trading Monday.

Exxon spokesman Henry Beathard described the company as ``extremely disappointed`` with the ruling, adding that it planned an appeal. He said Exxon hadn`t yet decided whether to ask the special appellate court for a rehearing or take the matter to the United States Supreme Court, but he said the company believed it has yet to receive its day in court.

``So far, the rulings in this case have been summary judgments decided on the basis of legal motions,`` Beathard said. ``It`s far too complicated a matter to handle that way, and we think there should be a trial.``

The $2 billion repayment, which reflects both the principal amount of the excess charges and interest, is the largest judgment ever entered against a single company for violating federal oil-price guidelines and may be the largest judgment against any single entity in U.S. history.

Beathard said, however, that Exxon believes it should only be responsible for its 67 percent interest in the Hawkins field. The rest of the field is owned by some 2,500 investors, including both individual royalty owners and such major oil companies as Amoco Corp., Mobil Corp., Conoco Inc. and Sun Co. If Exxon`s liability were limited to its two-thirds share, Beathard said Monday`s ruling would cost the company no more than $605 million, a figure that allows for recovery of windfall profits tax, severance tax and income tax already paid.

Meanwhile, by 2-1, the panel also ruled that federal Judge Thomas Flannery was within his authority when he ordered that the proceeds from the case be dispersed to state governments to fund energy conservation programs. Flannery ruled that it is impractical to attempt to identify and compensate victims of any oil overcharges.

The U.S. Department of Energy has estimated Exxon and most of the other oil companies overcharged consumers by as much as $10 billion under the law. President Reagan removed all price controls on oil eight days after taking office in 1981, and many of the companies have since reached out-of-court settlements with the Energy Department.

Last year, Exxon earned $5.5 billion, or $6.77 a share, on revenue of $97.3 billion.